Aug. 27, 2014, 7:21 PM
- IDC estimates global server sales rose 2.5% Y/Y in Q2 to $12.6B. That marks a turnaround from the 2.2% drop seen in Q1, and the 4.4% drop seen in Q4. Gartner estimates sales grew 2.8%.
- IDC declares the server market, hurt in recent quarters by system consolidation and a shift in demand towards the white-label gear beloved by Web giants (referred to by IDC as ODM Direct), is seeing "the beginning of a cyclical refresh cycle." It sees the pending launch of Intel's (NASDAQ:INTC) Grantley Xeon CPUs, along with Microsoft's plans to end Windows Server 2003 support, lifting sales into 2015.
- Sales of x86 servers (mostly Intel-based) rose 7.8% in Q2, and now make up 78% of industry revenue. Non-x86 server sales fell 12.8%.
- Market leader H-P's (NYSE:HPQ) share rose 40 bps Y/Y to 25.4%, with x86 growth offsetting Itanium weakness. #2 IBM's share fell 340 bps to 23.6% ahead of the sale of its x86 server ops to Lenovo; on the bright side, IBM's decline narrowed from Q1's 600 bps.
- #3 Dell's share fell 160 bps to 16.2%. #4 Oracle's (NYSE:ORCL) grew 10 bps to 5.9%, with engineered system growth offsetting declines for older UNIX/SPARC server lines. #5 Cisco (NASDAQ:CSCO), which recently proclaimed its UCS server ops are on a $3B/year run rate, saw its share rise 140 bps to 5.8% on the back of 35% growth. Cisco should pass Oracle in a quarter or two.
- ODM Direct vendors saw their share grow 110 bps to 6.6%. The shares of all other vendors rose 190 bps to 16.1%.
- Related tickers: SMCI, MLNX, QLGC, ELX
Aug. 8, 2014, 1:08 PM
- On top of beating FQ4 estimates, Emulex (NYSE:ELX) is guiding for FQ1 revenue of $93M-$99M and EPS of $0.07-$0.11, favorable to a consensus of $94.2M and $0.06.
- However, on the CC (transcript), the company forecast its storage connectivity/other products unit (SCOP - covers bridges, storage controllers, and other products) will decline by 30% or more in FY15 (ends June '15), as "a significant portion" of related sales enter the end-of-life stage.
- SCOP was 17% of FQ4 revenue. As it is, the unit's sales fell 32% Q/Q and 42% Y/Y during the quarter.
- On the bright side, Emulex thinks its slumping Fibre Channel adapter/switch business is improving, and believes (after seeing QLGC's FQ1 numbers) it grabbed 200 bps of Fibre Channel share in FQ4.
- The company also expects Intel's upcoming Grantley Xeon server CPU launch will boost Ethernet-related sales, though it suggests much of the impact will come in the second half of FY15.
- FQ4 results, PR
Aug. 4, 2014, 9:41 AM
- Barclays has upgraded InfiniBand switch/adapter market leader Mellanox (MLNX +2.5%) to Equal Weight, and downgraded Fibre Channel switch/adapter leaders QLogic (QLGC -1.3%) and Emulex (ELX -6.3%) - the former to Equal Weight, and the latter to Underweight.
- All three companies also have a presence in the data center Ethernet switch/adapter space. Barclays is optimistic about Mellanox's improving business trends, and worried about the impact of a declining Fibre Channel market on QLogic and Emulex.
- Mellanox rallied 10 days ago after providing strong Q3 guidance to go with in-line Q2 results, and providing upbeat commentary on demand from both HPC and non-HPC markets. QLogic plunged after guiding for a Q/Q gross margin drop (caused by a mix shift towards Ethernet products) to go with an in-line revenue forecast. Emulex reports on Thursday.
Jul. 25, 2014, 7:07 PM
- QLogic (QLGC -10%) posted in-line FQ1 revenue to go with a slight EPS beat, and also guided on its CC (transcript) for in-line FQ2 revenue: $121M-$127M vs. a $124.7M consensus.
- But the company also forecast its gross margin will drop to 62%-63% from FQ1's 64.4%, and said it's "comfortable" with a 62-63% GM for the whole of FY15.
- Perhaps more worrying than the guidance itself is the explanation: A mix shift towards Ethernet product sales, which are expected to grow by $3M-$4M Q/Q. With QLogic's core Fibre Channel market expected to keep declining, the company is counting on Ethernet sales (a double-digit % of revenue following the purchase of Broadcom's Ethernet controller unit), along with its budding storage ASIC business, to drive growth.
- CFO Jean Hu previously estimated the Ethernet business has only a ~40% gross margin. When pressed yesterday on Ethernet's long-term impact on Emulex's margins, she argued the company will be able to reap "manufacturing cost synergies" beyond FY15.
- Archrival Emulex (ELX -2.3%) followed QLogic lower. The company reports on Aug. 7.
Jul. 24, 2014, 4:30 PM
Jul. 11, 2014, 9:40 AM
Jul. 2, 2014, 6:00 PM
- QLogic (QLGC) has hired former SGI/Quantum sales chief Tony Carrozza to be its SVP of worldwide sales.
- Carrozza appears to be replacing Rob Crawford, who was hired by QLogic in 2011. Crawford isn't mentioned in QLogic's PR, but his LinkedIn profile still lists him (for now) as the company's SVP of worldwide sales. It was only in February that QLogic issued a PR praising Crawford for being named one of CRN's 2014 Channel Chiefs.
- The hiring comes as both QLogic and archrival Emulex struggle to deal with slumping Fibre Channel hardware demand.
Jun. 9, 2014, 1:18 PM
May 2, 2014, 4:43 PM
- QLogic (QLGC -7.9%) guided on its FQ4 CC (transcript) for FQ1 revenue for $116M-$122M. Thought that range is above a $114.8M consensus, it assumes $11M in revenue from Broadcom's NetXtreme II Ethernet controller business, whose acquisition was announced in March and hasn't yet been factored into all analyst estimates. EPS guidance of $0.17-$0.22 is largely below a $0.22 consensus.
- In addition, QLogic is guiding for FY15 (ends March '15) revenue to grow 10%-12%, after factoring a $60M contribution for the Broadcom unit. A Stifel analyst observes this implies a 2% revenue drop for the rest of QLogic's business at the midpoint. the consensus is for 2.3% growth. A Piper analyst observed the guidance implies a 4%-6% organic revenue drop if one also backs out Brocade's adapter card business (acquired in January).
- Emulex (ELX -5.6%), which crashed yesterday after providing weak guidance (and took QLogic and others lower with it), added to its losses today. Shares are down 35% over the last two days.
- Like Emulex, QLogic admits the Fibre Channel storage market is weak - it estimates a 6%-7% market decline. The company is counting on IP/Ethernet opportunities and growing storage ASIC sales to help offset the drop. The latter business, boosted by an FQ4 ramp at a major storage OEM, is growing at a 10% clip.
May 1, 2014, 4:26 PM
May 1, 2014, 11:14 AM
- On top of missing FQ3 sales estimates (while hitting EPS forecasts), Emulex (ELX -24.7%) is guiding for FQ4 revenue of $94M-$100M and EPS of $0.00-$0.05, well below a consensus of $115.7M and $0.18.
- Storage adapter card/controller/switch archrival QLogic (QLGC -6.1%), which reports after the close, is off in sympathy, as is storage switch leader Brocade (BRCD -2.4%). Mellanox (MLNX -1.7%), which competes against Emulex in the 10G Ethernet adapter space, is also declining; its shares already tumbled last week due to a Q1 miss and soft guidance.
- On its CC (transcript), Emulex mentioned its network connectivity product sales (71% of revenue, dominated by Fibre Channel storage offerings) fell 9% Y/Y, as Fibre Channel weakness more than offset 10G Ethernet growth. The FC issues are blamed on UNIX server weakness (sales have been in freefall for a while) and "specific issues" with an x86 server OEM (likely IBM).
- Moreover, in remarks with clear implications for QLogic/Brocade, Emulex says it now expects a "higher rate of secular decline in the Fibre Channel business than previously anticipated." Its own FC sales are now expected to fall at a high-single to low-double digit Y/Y clip vs. prior guidance for a mid-single digit drop.
- Also, Emulex's network visibility product sales (Endace, 6% of revenue) came in below expectations, and its legacy storage connectivity/other business (23% of revenue) is expected to fall 10%-15% in FY14 and perhaps over 30% in FY15.
Feb. 18, 2014, 6:24 PM
- QLogic (QLGC) is acquiring assets related to Broadcom's (BRCM) 10/40/100-gig Ethernet controller business, along with IP licenses related to Broadcom's NetXtreme II Ethernet controllers, for $147M in cash.
- In addition, QLogic is licensing Broadcom patents related to QLogic's Fibre Channel (storage networking) hardware for $62M, and will rely on Broadcom ASICs for NetXtreme II controllers. The license allows QLogic to avoid the type of lengthy legal battle archrival Emulex has seen with Broadcom.
- Broadcom says the deal will allow it to focus its "internal Ethernet controller efforts on strengthening its end-to-end data center platform." That suggests Broadcom is de-emphasizing the PC/workstation Ethernet controller market, where the company has long had a major position but has also faced stiff competition and price pressure.
- QLogic, meanwhile, is lowering its dependence on a Fibre Channel business that has seen very little growth in recent quarters, and is gaining additional products to cross-sell to enterprise hardware OEMs
- Both companies expect the deal to be accretive to EPS. QLGC +0.9% AH.
Jan. 29, 2014, 4:22 PM
Jan. 29, 2014, 12:10 AM| Jan. 29, 2014, 12:10 AM | 5 Comments
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Jan. 17, 2014, 4:12 PM
- QLogic (QLGC -2.2%) and Brocade Communications (BRCD -0.9%) enter into a strategic alliance to jointly develop Fibre Channel tech, align on product plans, and market SAN solutions.
- In conjunction, QLogic has acquired Brocade's Fibre Channel and converged network adapter business. Terms were undisclosed - the acquisition is not expected to materially affect either company's operating results.
- QLogic PR, Brocade PR
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